In a reportable decision in Van der Westhuizen N.O. and Another v The Master of the High Court, Mahikeng and Others (North West Division, Mahikeng, Case No M620/2022, judgment delivered 27 March 2026), Masike AJ considered two important questions arising from the liquidation of an assetless close corporation by a resolution passed by its members (“the members”) due to its inability to pay its debts (i.e creditors’ voluntary winding up).
Firstly, whether the members are automatically liable to contribute to winding-up costs merely because they are members (“contributories”). Secondly, whether the Master is entitled to a fee in respect of the winding up of the corporation’s estate (“the estate”) where the gross asset value (“the value”) of the corporation reflected in the first and final liquidation and distribution account (“the account”) is less than the prescribed minimum threshold (i.e currently R5 000.00).
Those questions arose when Harties Wine Club CC (“the corporation”) was liquidated by way of a creditors’ voluntary winding up special resolution passed by the members as aforesaid. The wording of the resolution indicated that the winding-up was intended to be for the benefit of the creditors. However, there were no creditors who proved claims in the estate.
The applicants, joint liquidators of the corporation (“the liquidators”), subsequently submitted the account to the Master (first respondent). The account reflected that the corporation had no assets that could be found by the liquidators or reflected in the account. The liquidators accordingly contended that the value of the estate for purposes of calculating the Master’s fee was nil and that the members of the close corporation were not liable as contributories towards winding-up costs.
The Master however contended that Master’s fees of R250.00 were payable and that the members were liable to contribute towards the winding-up costs. In support thereof, the Master relied on sections 153 of the Insolvency Act 24 of 1936 (“the Insolvency Act”), sections 337, 395, 397 and 403 of the Companies Act 61 of 1973 (“the Old Companies Act”), read with section 66 of the Close Corporations Act 69 of 1984 (“the Close Corporations Act”). Section 153 of the Insolvency Act, read with the applicable schedule, stipulates inter alia that the Master shall, for estates under final sequestration/liquidation, be entitled to a fee of R250.00 where the value is R5 000.00 or more but less than R50 000.00 (“the minimum threshold”). It was on that basis that the liquidators sought a declaratory order in respect of those issues.
For the following reasons, the Court rejected the Master’s argument and correctly held that members of a close corporation do not become “contributories” purely because they are members. Section 337 of the Old Companies Act does not itself create liability as it identifies persons who are already liable to contribute. In a close corporation, members are liable only if they agreed to it in the founding statement or have bound themselves separately as sureties, indemnitors or guarantors. The Court emphasised that section 2(3) of the Close Corporations Act preserves the corporation’s separate juristic personality, with the result that members are not personally liable for its debts or obligations simply by virtue of membership. Sections 63 (imposing joint liability for debts of the corporation in prescribed circumstances), 64 (imposing liability for the reckless or fraudulent carrying-on of the business of the corporation) and 65 (empowering the court to disregard the separate juristic personality of the corporation in cases of gross abuse) reinforce this position by creating only limited exceptional instances of personal liability. The Court also held that sections 395, 397 and 403 of the Old Companies Act are procedural in nature and accordingly enable the recovery of contributions in respect of winding up costs where liability already exists.
Regarding the Master’s fees, the Court held that no fee was payable as the corporation has no assets, given the required minimum threshold referred to above. The Court held further and confirmed that a taxing provision (i.e section 153 of the Insolvency Act) must expressly impose liability and cannot be extended or imposed by implication or tacitly.
In conclusion, the court therefore confirmed two central principles: (i) members of a close corporation are not liable for winding-up costs merely because of their membership without more and (ii) no Master’s fee is payable where the value is below R5 000.00. It also emphasised that liquidators, who accept appointment knowing that the estate is assetless, must bear any professional costs and expenses incurred in the winding-up as an irrecoverable charge of that appointment. They thus do so at their peril.
